Joint Life Insurance: What's the Benefit for Canadian Couples? (2023 Guide)

Verified by Tobin Tuff, Certified Life Insurance Advisor, COO & Co-Founder at PolicyMe
In This Article

Key takeaways

  • Joint life insurance is a type of policy that insures two people and pays one death benefit.
  • Couples can choose to hold separate policies for maximum flexibility.
  • Joint life insurance plans can be more affordable than two individual policies.
  • Some insurers (like PolicyMe) offer a discount if you apply for separate policies at the same time.
  • Couples should have a life insurance policy in place to protect their family financially.
  • Couples with young kids or large debts like a mortgage most urgently need life insurance.
  • Joint or individual term life insurance is the best option for most Canadian couples.

What is joint life insurance?

Joint life insurance is a single policy that covers two people and provides a financial payout to the named beneficiaries.

This applies both to couples that are married and who are common-law.

Joint life insurance comes in two main types: first-to-die and last-to-die.

If one partner passes during the term of the life insurance, their beneficiary gets a tax-free, lump-sum payment that they can use however they want.

Couples can use a life insurance payout to cover:

  • Lost income
  • Support dependents like kids or ageing parents
  • Pay off big loans like a mortgage
  • Stay on track with saving up for retirement or the kids' post-secondary education
  • Final expenses

Couples need life insurance to make sure their partner (and any other dependents, like kids) has a financial safety net in the worst-case scenario.

In most cases, a joint term life insurance policy is the best suited for young families with children. It provides coverage for your dependents until they reach adulthood, a period spanning 10 to 20 years.

How does joint life insurance work in Canada?

Here's how a joint life insurance policy typically works in Canada:

  • The couple applies at the same time
  • The couple pays one premium per month, not two
  • The policy pays out once: upon the death of the first partner.
  • After the policy pays out, it expires.
  • A typical joint policy will cover both partners under the same terms and conditions.

There are two main types of life insurance for couples: individual life insurance and joint life insurance. 

We'll go through the pros and cons of each so you can decide which one is best for your family.

We'll focus on term life insurance policies, since most Canadian couples need this type of life insurance, not permanent policies like whole life insurance.

What happens to joint life insurance after divorce?

Joint life insurance policies can be tough to divide if you and your partner decide to divorce or separate before the policy's term is up.

Fortunately, you have options if you have a joint policy and you and your partner split:

  • Name each spouse as the beneficiaries in trust, to manage the funds on behalf of the children if the other passes away
  • Keep the policy as-is
  • Transfer the policy to one spouse
  • Cancel the policy outright

Types of joint life insurance

There are a three main types of joint life insurance policies:

  • First-to-die joint life insurance
  • Last-to-die joint life insurance
  • Combined individual life insurance

Which type you get depends on your family's priorities. We've broken down the differences between each policy in the chart below.

Chart comparing types of joint life insurance policies for article about single vs. joint life insurance

1. Joint first-to-die life insurance

A joint first-to-die life insurance policy pays out the death benefit to the first partner to pass away in a joint life insurance plan. The money goes to the surviving partner to help pay for living expenses, support young children or cover funeral costs.

A joint first-to-die life insurance policy is the best option when spouses share financial obligations such as a mortgage, debts or have children in their care. While you can name other beneficiaries, the payout from joint first-to-die policies is generally intended to benefit a partner.

Why? Joint first-to-die policies act as “income replacement” policies, just like a traditional term insurance policy. It helps reduce the impact of a sudden loss of salary when a partner passes away

2. Joint last-to-die life insurance

A joint last-to-die policy serves a different purpose. Also known as a survivorship policy, this type of insurance only pays out after both partners have passed. For this reason, it’s not the right policy to choose if you want a payout to go to your spouse. 

Often, the couple’s children are named as the beneficiaries and the payout is meant to ensure their ongoing financial stability, rather than cover any debts or obligations.

In addition, when someone passes, they may leave behind a hefty tax bill for their estate to settle. Last-to-die life insurance helps pay any remaining tax liabilities on the deceased individuals’ assets and reduces the costs on the surviving family. 

3. Combined life insurance

Combined life insurance isn’t actually a joint life insurance policy at all. It works differently from first-to-die and last-to-die insurance, where one policy covers both people in a relationship.  

Instead, combined life insurance joins two separate policies, with different terms, conditions and payouts.

When each partner holds their own policy, two separate death benefits can be paid out. However, insurers will often offer a discount for combining policies since they only have to charge a single policy fee when underwriting two people at the same time.

Joint life insurance: Pros and Cons

Joint life insurance isn't for every couple, though it offers some pros versus individual life insurance, as well as some drawbacks.

Pros of joint life insurance

1.  Joint life insurance is affordable and accessible to young families looking for coverage.

  • It’s less expensive for a company to cover two people with one payout
  • The administrative costs of underwriting two people together are lower than insuring two people on separate occasions

2.  Applying for joint life insurance is a more straightforward process.

  • Applying for joint life insurance is quicker and easier than going through the process of securing two policies

Cons of joint life insurance

1.  Joint policies are challenging to split up.

  • If you and your partner decide to divorce or separate, there’s no simple way to divide a joint life insurance policy
  • You may choose to keep the policy as-is, transfer it to one spouse, or cancel it altogether

2.  Obtaining individual coverage later in life can be expensive.

  • If your partner passes away or you choose to separate, you may need to buy a single life insurance policy for yourself
  • The costs of life insurance can be significantly higher if you’re older or have health problems

3.  With joint policies, both you and your partner are covered for the same amount and term.

  • If you and your partner have different needs or goals for your life insurance, separate policies may offer the flexibility you need to tailor your coverage.

If you know you need life insurance but you don't know how much, try our term life insurance calculator. It'll help calculate enough coverage for your entire family. Or get a no-obligation quote online in just a few clicks.

And you save 10% on the first year of your life insurance policies when you and your partner both apply for PolicyMe Term Life Insurance.

Individual life insurance policies for couples

A single life insurance policy only covers one person.

If you choose to go this route, you and your partner will purchase and hold policies separate from one another.

You can combine your policies if you apply for them at the same time.

Pros of individual life insurance

  • There's one big benefit to getting joint life insurance: flexibility.
  • Individual life insurance policies let you and your partner customize the terms, premiums and conditions for each of your policies.
  • Your spouse or partner’s coverage remains in place even if you pass since your life insurance policies are independent of each other.
  • If you choose to divorce or separate, you won’t have to deal with dividing your coverage into separate policies.

Cons of individual life insurance

  • This flexibility generally means a more expensive monthly premium; it's usually more expensive to buy two different policies than a joint policy covering two people. 
  • If only one of you gets around to purchasing life insurance and the other passes away, the surviving partner will be left with no payout or financial safety net.

Worried about adding life insurance to an already stretched budget? Couples life insurance is more affordable than you think.

The best life insurance options for couples in Canada

There are a number of life insurance companies in Canada that are known for their joint life insurance policies, including:

  • Manulife Life Insurance: Affordable joint policies and an extra three per cent savings when couples choose the same policy length and coverage amount.
  • ivari Life: Offers the option of joint policies for up to five people (two is the norm). Their prices do tend a bit higher than average.
  • Canada Life Insurance: You can choose from multiple riders to add to your joint policy, such as child coverage.
  • PolicyMe: Yes, us. We don't offer joint policies, but our joint application process lets each partner apply online in about 20 minutes and save 10 per cent in their first year.

Here's what you need to consider when researching the best life insurance for couples in Canada:

1. Affordability: How much does the policy cost?  Some companies will give you a discount when you and your partner both apply for coverage.

2. Approval time: How long does it take to get approved? Sometimes, insurers can take months to process applications.

3. Ease of application: Can you complete the process online, or do you have to see somebody in person? An electronic application and document delivery option is fast and convenient for busy families.

PolicyMe offers hassle-free and cheap term life insurance for couples, with an online application and approval process.

You can customize each respective policy to match the coverage amount and term length that each partner desires. Plus, the average application time is 20 minutes.

How much life insurance coverage do couples need in Canada?

How much life insurance coverage a couples needs in Canada will depend on their particular situation.

How do you find the sweet spot between purchasing too much coverage and not buying enough?

These questions will help you start thinking about the right coverage amount for your family. Use them as a thought-starter to help bring clarity to how much life insurance you need for your specific situation

  • In your absence, do you need your mortgage payments covered? What other large debts, loans, etc. would you leave to your partner?
  • If you have children, how many years of income do you want to leave them with, if any? What about their education/tuition?
  • How long does your partner or spouse have until they retire? Would they need income supplemented without you around?

Calculate how much income you’ll need to provide for your family, and you also need to estimate how long of a period of time that coverage will be necessary to keep your family afloat. Everyone will answer these questions differently.

When is the best time for couples to get life insurance?

The best time for couples to get life insurance is when either of them depend on each others' income.

Are you in a relationship with shared financial obligations and dependents in your care?

If so, it’s time to start thinking about couples life insurance. The sooner the better, for young married and common-law couples alike.

In a recent survey, we found that while 77% of Canadian parents have life insurance, many either have: 

  • Inadequate coverage (i.e. a group insurance plan through their employer)
  • Unnecessary coverage (i.e. permanent life insurance or life insurance policies on their child)

It might sound obvious, but the risk of passing away is low if you’re healthy. So life insurance might seem like an unnecessary expense, but no one plans to pass away young. 

The purpose of couples life insurance is to help safeguard your family from the financial impact of an unexpected death. This applies to both joint life insurance and individual life insurance.

Use our free life insurance calculator to get an idea of how much couples life insurance might cost.

Real-life example: Rachelle and Ben's experience with life insurance

Rachelle has been married to her husband Ben for four years; they have a three-year-old daughter together and pay a mortgage on their home. 

Life Insurance for Couples: Image of couple wearing sunglasses with text that reads "Meet Ben & Rachelle!"

After getting Ben on board, they applied for life insurance with PolicyMe. They weren’t sure how much coverage they’d need, but then he asked a question that clarified things for both of them.

Ben asked, “What would make life a bit easier if you and our daughter were left in a tricky financial situation?”

They decided it’d be ideal to have enough to:

  • Pay off their home ($500,000)
  • Cover their daughter’s post-secondary education ($80,000)
  • Pay off their debts ($10,000)

They also opted to include coverage equal to a year of salary. This brought them to a life insurance policy of $700,000. 

Using PolicyMe’s online life insurance calculator, they were approved in minutes and had their policies set up within a week. 

“The weight of the financial “what if” was lifted, and trust me, it’s a beautiful feeling,” says Rachelle. 

“So here’s my advice: tonight, while your partner looks for something to watch on Netflix,  grab your phone and fill out an application. I promise, you’ll have it done before they find a show, and you can rest easy knowing that you’re both protected.”

For many couples, particularly if they’re young and healthy, term life insurance policies offer enough coverage to insure against a worst-case scenario. 

Most insurance companies offer term life insurance but may require in-office appointments for consultation, approval and paperwork. 

Life gets busy with work, errands and the kids constantly underfoot. So we’ve made it easy for parents to find affordable life insurance coverage even if a thousand other things are going on. 

Compare our rates for term life insurance against some of our competitors below.

life insurance for couples - term life insurance cost comparison

Pricing based on publicly-available rates as of July 2022. Terms and conditions may apply.

Read full reviews of the best life insurance providers.

In summary: joint and individual life insurance for couples

If you're like most couples in Canada, you have bills to pay, mortgage payments to cover, and kids to take care of, no matter what happens. Getting a life insurance quote online and finding the right coverage for your family can be quick and easy.

  • It’s essential to have a life insurance policy in place for you and your partner to protect your family financially in case the worst happens.
  • You and your spouse can choose to hold separate policies for maximum flexibility, but joint life insurance plans can be more affordable.
  • Some life insurance companies offer a discount if you apply for separate life insurance policies at the same time. For example, you save 10% on the first year of your life insurance policies when you and your partner both apply with PolicyMe.
  • Life insurance is less pricey when you’re young, so it’s a good idea to apply sooner.

FAQ: Joint life insurance in Canada

Does joint life insurance pay out twice?

Whether joint life insurance pays out twice depends on the type of joint life insurance you hold. For example, first-to-die and last-to-die insurance only pay out once because they operate as one policy covering two people. 

However, combined life insurance does pay out twice. It’s when you and your spouse opt for two separate policies from the same insurance company at the same time. Two policies = two payouts.

Is it cheaper to get life insurance as a couple? 

Generally, yes—it’s cheaper to get life insurance as a couple whether you opt for one policy, or even two policies at the same time (in the case of combined life insurance) than to get life insurance separately, at different times. 

Because it’s more efficient for your insurer to underwrite two people at the same time, there’s usually a small discount involved when you apply for insurance as a couple.

How much life insurance do married couples need? 

How much life insurance married couples need depends on your goals. If you were to pass, would you want your home paid off? Your children’s RESPs funded? For your spouse to receive funds to supplement their income? 

There’s no hard and fast rule, but consider things like

  • The amount outstanding on your mortgage and other debts
  • The costs involved in caring for your dependents
  • The amount of replacement income to leave for the surviving spouse

In general, policies are often purchased for anywhere between 5 and 10 times the holder’s annual salary. According to the Canadian Life & Health Insurance Association, the average Canadian household is insured for about $442,000.

Do you need life insurance when you get married? 

You don't necessarily need life insurance when you get married.

The purpose of life insurance is to leave behind a financial safety net for your family in case you or your partner passes.

If you're married and have shared financial obligations, like a mortgage or young kids, it’s a good idea to consider getting life insurance. That way your family will have a financial cushion if you weren't there to support them.

Of course, you don't need to be married to share financial obligations. Any committed relationship, such as common-law, can mean shared financial obligations which means you probably need life insurance.

Laura McKay

COO & Co-Founder

About the Author

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